The appellant, an egg producer, intentionally exceeded its production quota and was assessed an over-quota levy by the provincial marketing board.
The appellant deducted the levy as a business expense under the Income Tax Act.
The Minister disallowed the deduction.
The Supreme Court of Canada held that the levy was deductible as a current business expense under s. 18(1)(a) of the Act, as it was incurred for the purpose of gaining or producing income.
The Court ruled that the income tax system does not distinguish among levies, fines, and penalties, and that public policy considerations should not be used by courts to disallow deductions that are otherwise permitted by the clear language of the Act, leaving such policy choices to Parliament.
